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Microsimulations of a dynamic SUT economy-wide Leontief-based model for the South African economy

Kambale Kavese () and Andrew Phiri ()
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Kambale Kavese: Eastern Cape Socio Economic Consultation Council

No 1910, Working Papers from Department of Economics, Nelson Mandela University

Abstract: An “Economy-Wide Leontief Multiplier Based Model” calibrated on Supply and Use Framework, and a “Micro-Simulation Model” is used to assess post-recession trends in macroeconomic, labour, and fiscal multipliers for South Africa. The simulations show that during the post-reces¬sion era, the effect of exogenous shock in the economy, like increases in investment spending, although positive, yielded a smaller return in terms of tax revenue, job creation and economic growth. At sector level, these results demonstrate how the inter-industry and industry-consumer links have weakened in the post-recession period. At policy level, the findings imply that the persisting low growth trajectory associated with weaker inter-industry linkages could be exacerbated, while the fiscal austerity measures associated with weaker forward and backword tax linkages could be prolonged. We recommend government should follow a priorities-based spending policy that yields optimal socioeconomic returns.

Keywords: Supply and Use (SUT) tables; Fiscal multipliers; Ficscal multipliers; employmetn multipliers; South Africa. (search for similar items in EconPapers)
JEL-codes: C67 D57 E62 J21 R15 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2019-11, Revised 2019-11
New Economics Papers: this item is included in nep-cmp and nep-mac
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http://repec.mandela.ac.za/RePEc/mnd/wpaper/paper.1910.pdf First version, 2019 (application/pdf)

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